Checklist for Buying Real Estate and Property in India.

Are you looking to invest in real estate in India? There are some very important and logical criteria which one should consider while looking to invest in property in India, especially the city of investment.  It is very easy to get swayed by glossy brochures, big banner advertisements, TV commercials, brand ambassadors etc. Need to understand as an investor that we end up paying for all this; the cost of property includes the marketing expenditure, irrespective of quality of the property. Let’s for now concentrate on residential property in India (as the criteria vary for a commercial property) and look at some of the important facets which should be analysed before the physical investment. 

Real Estate Profiling a City

As a real estate investor one should learn the art of real estate profiling of a city, it is ‘the’ most important aspect, which helps generate the big picture. The aspects which need consideration are the economic profile of the city, its contribution towards the state GDP; industrial infrastructure and job opportunity profile; social and religious stability; political profile and stability; weather and natural calamity index. 

What percentage is the End User Market?

Before investing in property in any city in India, it is very important to analyse the end user profile of the city. Every city has its own real estate peculiarities in India. It needs to be understood that the residential real estate is dependent on demand and if end user demand is not there in a particular city, that residential property market is going to suffer or fail in the long run. Secondly, as an investor one needs to appreciate the segment profile of a locality for investment; whether it is an affordable, mid-segment or luxury property based area. For example, it doesn’t make sense to buy a luxury property in Borivilli, Mumbai, as the area is known for affordable housing. 

The Political Profile- Real Estate Impact

Whether we like it or not, real estate in India is directly linked to politics. All political families or parivaars, own large packets of land across states and cities. The infrastructure development alongwith corporate money (they are to please their political masters) is going to flow as per the political profile of the state. One also needs to understand that this profiling more often than not changes after every 5 years with elections. As a testimony the Master Plan (which is supposed to look at futuristic planning) of Gurgaon has been re worked out 3 times in last 10 years.

As an investor one needs to be very careful and identify ‘safe investment pockets’ in a city from the real estate perspective, especially in the newly developing areas.  There are always neutral areas in any city, which do not get affected by the political switchover. Reliable local brokers are the best source for such information. We have enough examples of this facet in Gurgaon, the so called millennium city. 

Real Estate Index

There are any number of property and real estate indexes in India, being circulated by private companies, however these can be biased, based on specific interests. The best is to follow RBI (Reserve Bank of India) and NHB (National Housing Bank) indexes, both of which are based on proprietary algorithms and cover the entire spectrum of real estate, with a reasonable sample size. These indexes give a fair real estate profile of any city in India.  

Infrastructure Developments

One of the most important factors which effects the growth of real estate is the planning and progress of infrastructural developments in that city or locality. Infrastructure in terms of roads; highways; industry; services to include – education, hospitals etc.; transport systems; master plan; housing; airport etc.

The above are just broad heads which need to be considered before indulging in purchase of residential real estate or property in India. It needs much more detailed analysis and due diligence before arriving at the final decision of which property to purchase and in which city.

Can Technology Disrupt the real Estate Fog in India?

Real Estate in India has generally remained away from technology, especially the internet. The main reason for this has been the fact that real estate sector has always been thought of as a hardware sector and soft skills had no place. Somehow, Real estate property has remained aloof form the fast developing IT infrastructure and technological advancements in various fields, which could contribute tremendously towards making real estate a progressive sector. Real estate has been uncomfortable to embrace soft technology also because it avoids transparency.  As the sector is connected with a number of illegal and unethical practises and technology has the power to clean up the system, it has been deliberately avoided.

The real estate sector needs to realise that internet and technology are here to stay, the faster the sector adopts technology the transition would be smooth, else it would be disruptive. The Indian consumer in the past few years has transformed into a smart user, technology has empowered him to analyse, compare and choose as per his will and desire, we can say that he has been spoilt for choice. It is predicted that 20 billion things will be connected by IOT by 2020 and there would be 5 billion smart phone users’ world over. The smartphone segment has grown 35% y on y till 2015 and is predicted to grow at 37% by end of 2016 in India. By end of 2015 India was estimated to have 239 million smartphone users, having pegged USA for the first time. 60% of internet users in India access the net through their smartphones. In 2015, mobile data traffic in India accounted for 11% of wireless and wireline traffic cumulatively, and the share is expected to swell to 34% by 2020. Mobile traffic per user in India is expected to reach 1,704 megabytes per month by 2020-a huge leap from 185 megabytes per month in 2015, along with a CAGR of 56%. The average smartphone generated 430 megabytes of mobile data traffic per month in 2015, almost doubling up from 299 megabytes per month in 2014. This is expected to touch 2 GB by 2020. There are more than 114.63 million mobile subscribers in India, who access 3G/4G networks to get their everyday tasks done through the web. All these figures are suggestive of the humungous growth potential of the online market and services in India in the years to come.

From pencils to fridges; undergarments to electronics; perishables to automobiles the Indian consumer is purchasing almost anything and everything on the net. Integration, synergy and technology are making life and business simply smart. Whether the real state sector likes it or not it needs to embrace smart technologies and grow up to them in case it envisions to expand, grow and flourish. IOT is the future and is going to be the disruptive technology in the coming years at a very fast rate. The real estate sector needs to graduate and exploit technology to reach out to potential consumers who are more and more going to rely on smart technologies.

As far as the Real estate in India is concerned this basically implies that it needs to come out with a clean and transparent approach, which gives the end user the confidence and certainty to access reliable, unbiased and factual information, online. Real estate firms in India need to embrace technology in a manner which empowers the end user with so much of authentic information that the need to visit and verify the inputs on ground should not arise at all. The end achievable state should be that an individual investor is able to purchase a property with the same ease and confidence with which he buys any product online.

Property and Real Estate Websites in India – Need to Share Responsibility

India has recently jumped to the second spot in terms of internet users and has taken over from USA. The internet user figure was expected to jump to 402 million by mar 2016; it stands at 462 million at the end of May 2016, which is a growth of 49%. India has a penetration of 34.8% users as compared to a world average of 40%. India is number 2 with a lower than world average internet penetration; the figures are indicative of the huge potential which this industry holds. Surprisingly, rural internet user base has jumped 77%, the mobile internet growth in the same sector has been 60%. Small metros lead the pack with a growth rate of 60%. The ratio between male and female is 71:29 in rural areas and 68:32 in urban areas.

With the cost of smartphones dropping by the day, these figures are likely to increase exponentially in the coming months. The Digital India campaign of the Government has been a great enabler in this effort. With government data available on a click and processes being brought online, the requirement of internet would be a necessity rather than a luxury projects in India. Today, from college admissions to PAN, Adhaar, voter ID, banking and even driving licences have become paperless and online. With more and more automation and App development it is obvious that an average Indian in the age group of 18 to 65 would require the internet on a daily basis and not for social media but for serious day to day activities or business.

The internet phenomena has caught on because of two primary reasons one, is the ease of business and secondly, transparency. These by the way are the biggest bottle necks or trouble shooters for the real estate sector; despite an economic recovery if the real estate sector is suffering is primarily because of these two factors. The real estate and property websites in India need to seize this opportunity and develop platforms which usher in transparency in the sector. There is an on-going drive at the government end to digitise the land records, once this is achieved it would remove a plethora of mal practises in the real estate sector in India. The property and real estate websites in India need to grow out of their shell, become independent of the builder’s lobby and look at innovative ways to empower the market. The potential was, and is huge however the will has been lacking. The real estate sector in India is huge and is riddled with its own complicated processes; the property and real estate websites need to ease out the process of doing business, make the market attractive and set in transparency; wherein the builders have no choice but to come clean in case they have to do business.